Taxability of road-construction materials turns on whether title passed under a separate supply contract or within the works contract.

Materials used in road construction are not automatically taxable as a sale under the Orissa Sales Tax Act, because a road is immovable property and sales tax applies only to movables. The decisive question is whether title to the goods passed to the purchaser under a separate supply arrangement or whether the materials were merely constituents absorbed into the construction contract. As the assessment orders did not properly examine the agreement or this distinction, they were quashed and the matter was remitted for fresh determination on the passing of title and the true nature of the contract.

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Issues: Whether materials used in the construction of a road under the contract constituted a taxable sale under the Orissa Sales Tax Act, and whether the assessment orders could stand without a clear analysis of the agreement and the passing of title to the movables.

Analysis: A road is immovable property, and sales tax can be levied only on sale of movables. Where the agreement is for construction of a road and the materials supplied are merely constituents used in that construction, the question is whether the goods passed to the purchaser as movables independent of the construction contract or only as part of the immovable property. The assessment order did not clearly examine the agreement or distinguish between a separate supply contract and a construction contract, so the legal position was not properly appreciated.

Conclusion: The materials used in road construction were not automatically liable to sales tax; the assessing authority must determine whether title to the movables passed as part of the construction work or under a separate supply arrangement. The assessment orders were quashed and the matter was remitted for fresh determination.

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